World Markets Live - June 1 - CNBC Live Events

CNBC Live Events

World Markets Live - June 1

We’ll be updating you throughout the day with essential breaking news, data alerts, earnings reports and all the major market movements.

    Good morning and welcome to World Markets Live.
    We'll begin full blog coverage from 06:00 a.m. GMT. Here are the opening calls for Europe.
    These are the top headlines this morning.
    • The Nasdaq logs its seventh straight month of gains for the first time since 2013, while energy lags - posting its worst month this year, dragged down by the oil price.
    • President Donald Trump says he will announce his decision on the Paris accord today, as European Commission President Jean-Claude Juncker warns it will take years to quit the climate agreement.
    • Oil prices recover from sharp losses on a report U.S. stockpiles have fallen, but the OPEC and non-OPEC deal stays under strain from increasing output in Libya and Nigeria.
    • In an exclusive interview, the governor of Russia's central bank tells CNBC rates will be going lower.
    A subdued day for U.S. markets yesterday, with stocks finishing the session flat towards the downside.
    Despite the slip, the indexes finished the month higher. The Nasdaq has now posted a seventh-month winning streak, its best run since 2013.
    The State Department has denied reports that certain Russian sanctions are starting to be lifted. The U.S. government was responding to Washington Post claims alleging that President Trump's team was returning two compounds in the U.S. to their Russian owners.
    The diplomatic facilities in question were shut down last year by the Obama administration in retaliation for Russia's alleged interference in the American presidential election.  
    Meanwhile, former FBI Director James Comey (pictured) is expected to testify in public before the Senate Intelligence Committee next week after receiving clearance from Special Counsel Robert Mueller.
    That's according to NBC News sources. It is still unclear whether President Trump will invoke his executive privilege to prevent Mr Comey from testifying in front of the committee investigating Russian election interference.
    Elvira Nabiullina, head of the Russian Central Bank, explains why inflation concerns are holding her back from cutting interest rates more quickly.
    According to our internal research, our neutral real interest rate could be 2.5, 2.75 percent. That means we stayed at 4 percent inflation we could have 6.5, 6.75 percent of nominal rate. Our key policy rate is much higher now as you have said. Why? Because we have this elevated inflation expectation.  They are not anchored; they're higher than our target.
    That's why we are trying to keep this toughness of our policy to achieve our target for medium term. Of course we see some inflationary risks related to the dynamic of oil prices - now they are quite high but who knows that dynamic of oil price is not very predictable we can say.
    Join us tomorrow: we will bring you the plenary session live from St Petersberg from 13:00 CET, with Russian President Vladimir Putin, Indian Prime Minister Narendra Modi, Austrian Chancellor Christian Kern and President of Moldova, Igor Dodon. 
    Oil prices are recovering after suffering sharp declines in yesterday's session on signals that OPEC's output rose in May. However, data showing a drawdown in U.S. inventories is supporting crude prices this morning. 
    Nick Coleman, oil specialist at S&P Global Platts, says the reaction to last week’s OPEC meeting was underwhelming.
    There was a sense that OPEC was treading water, it didn’t really take decisive action, and there’s weariness in oil markets that we’ve been hearing for many months now that the market was about to tighten, that those global oil stocks were about to fall, and it didn’t really happen. Oil stocks are still really high.

    However, Coleman adds that we’ve started to see U.S. stocks fall and we’re entering a period of seasonally higher demand due to the U.S. driving season, as well as the increased use of air conditioning in the Middle East.

    NBC correspondent Kristen Welker has more about the impact if the U.S. pulled out of the Paris Agreement

    President Trump is keeping the world in suspense about his plans regarding the Paris climate agreement. Global leaders, big business, and environmentalists are all watching to see whether he will withdraw from the landmark deal in an announcement at the White House later today. 
    Tesla CEO and White House Advisor Elon Musk has reacted to the news in a series of tweets. The billionaire entrepreneur said he and his team have done all they can in advising the Trump administration to remain in the Paris agreement.

    Asked what he would do if the president pulled out of the accord, he said he would have no choice but to leave his advisory roles.
    European Commission President Jean-Claude Juncker has also issued a strong warning to the President about pulling out of the Paris agreement.

    He said it was a decision that would affect the whole world and that any withdrawal would take years to process.
    Asian markets outside of Japan were flat after four sessions of losses caused by profit-taking have following last week's two-year high.
    Chinese stocks were under pressure due to disappointing PMI data, while Japan Nikkei's rose around 1 percent as data showed Q1 corporate profits were at record highs.
    San Francisco Fed President John Williams has said 3 rate hikes in 2017 is his baseline view.

    Speaking in South Korea, Williams was bullish on the U.S. economy and even said a fourth rate hike may be appropriate if growth surprised to the upside.

    He added that inflation remaining below the Fed's 2 percent target is a challenge for monetary policy.
    U.K. party leaders at last night's BBC election debate roundly condemned Prime Minister Theresa May for failing to participate at the event. The Conservatives opted to deploy Home Secretary Amber Rudd instead.
    Sparring with Rudd and UKIP leader Paul Nuttall on his party's economic policies, Labour's Jeremy Corbyn called out Nuttall for his claim that raising corporation tax would result in businesses leaving the country.
    From left to right: Tim Farron, Liberal Democrat; Jeremy Corbyn, Labour; Caroline Lucas, Green; Leanne Wood, Plaid Cymru; Amber Rudd, Conservatives; Paul Nuttall, UKIP; Angus Robertson, SNP; and BBC presenter Mishal Husain.
    Sterling is slipping today on concerns around the U.K. election following a leader's debate last night.
    Markets fear Prime Minister Theresa May could lose control of parliament, as some recent polls suggest Labour leader Jeremy Corbyn has slashed the Conservatives lead to 3 points.
    These are the top headlines for the hour.
    • The Nasdaq logs its seventh straight month of gains for the first time since 2013, while energy lags - posting its worst month this year, dragged down by the oil price.
    • President Donald Trump says he will announce his decision on the Paris accord today, as European Commission President Jean-Claude Juncker warns it will take years to quit the climate agreement.
    • A leadership debate to end the month of May, but without the Prime Minister. Other party leaders go head-to-head as the latest polls show Labour closing the gap on the Conservatives ahead of the June 8th election.
    Swiss real GDP grew 0.3 percent quarter-on-quarter (below forecasts of 0.4 percent) and 1.1 percent year-on-year in the first quarter.
    Russia's manufacturing PMI rose to 52.4 in May from 50.8 in April.
    One more piece of economic data.
    U.K. May house prices fell 0.2 percent month-on-month versus a fall of 0.4 percent in April, according to Nationwide. This fall was greater than the 0.1 percent dip forecast.
    Year on year, house prices grew 2.1 percent, versus 2.6 percent in April.
    House prices have fallen for three months in a row, the first time since 2009.
    Just over half an hour to the open of European markets. Here's the futures values for some of the major European bourses.
    British chemicals and sustainable technology firm Johnson Matthey has posted a 12 percent increase in full-year revenue, saying results were in line with its expectations.
    Robert MacLeod, CEO of Johnson Matthey, says momentum has picked up in the second half.
    We’ve done very well, particularly in our emission control technologies business; that makes catalysts for cars and trucks and that business has outperformed very significantly in the first half, and that’s been the major driver of our growth this year.
    MacLeod says the firm is investing significantly in R&D to develop future growth.
    Here are some top headlines from the world of technology.
    • Uber has announced its head of finance is leaving the company despite first-quarter losses shrinking compared to the last quarter. Revenues at the company rose 18 percent to $3.4 billion. 
    • Alphabet CFO Ruth Porat addressed the potential for self-driving cars at Recode. Speaking on the main stage, she outlined how Google's Waymo project was progressing, saying it will save lives and transform cities. LinkedIn co-founder Reid Hoffman also weighed on the sector and what it could bring to the modern world, saying autonomous vehicles are a near-certainty that will create lots of new jobs.
    • Bitcoin's rally in recent weeks has been supported by asset managers, including Fidelity Investments and Hargreaves Lansdown, which have added the cryptocurrency to their digital investing platforms. This, among increased demand from Asia, have driven the price of Bitcoin up nearly 60 percent in the month of May. 
    Sweden's May manufacturing PMI reading dropped to 58.8 from 62.5 in April.
    At the Recode conference in California, Hillary Clinton was asked for her reaction to the news that President Trump may pull out of the Paris Agreement on climate change.
    Usually when you come into office you can try to reform, maybe tinker with agreements, but part of what keeps us going is that America's word is good and you stand with your prior administration, whether it was of your party or not.
    They're looking to throw all that out the window. But what's really stupid about it is they are throwing out  the economic opportunities that being part of the Paris Agreement provides for the United States.
    Francesco Starace, CEO of Enel, says he would be extremely disappointed if President Trump pulled the U.S. out of the Paris Agreement.
    I think it would be bad that the U.S. leaves the Paris Agreement. It would be a blow to the Paris Agreement itself from a symbolic standpoint.
    We have to remember that the energy policy of the U.S. is really driven by the States of the U.S.A. which have different policies; you have very little in common with Wyoming and California, for example. But most of the States seem to be sticking with their policies.
    He says it would be bad for the U.S. itself to step out of the agreement, as the rest of the world would have to step up to fulfill the pledges made by the U.S., but adds that the move would not impact business itself.
    European markets are now open for trade. The pan-European has opened cautiously lower.
    Here's how the major European bourses are moving at the start of June trade.
    Barclays shares are up almost 2 percent on news it has sold almost 34 percent of its African business for £2.2 billion. This as part of an exit strategy from the continent while focusing on Britain and the United States.
    Amec Foster shares are also higher. The firm has been awarded a contract by Saudi Aramco for the development of its Marjan offshore oilfield. Under the five-year contract, the British oil company will work on design and project management.
    Rosneft has upped its damage claim against Sistema to 170.6 billion roubles. Russia's largest oil producer accuses Sistema of stripping assets from Bashneft, which was privatised in 2005 before being renationalised in 2014. Roseneft purchased oil company Bashneft in 2016.
    Mikhail Shamolin, president & CEO of Sistema, says Rosneft’s claim is baseless.
    One of the parts of the claim states that the treasury shares that were on the balance of Bashneft that were cancelled in the amount of 12 billion roubles is now considered a damage that was done to a company, and yet cancelling treasury stock is absolutely typical transaction all companies in the world do on a regular basis, because once the company buys its own stock and it wants to transfer this buyout to shareholders, it cancels the shares.
    It’s a typical corporate transaction, there’s nothing to it.
    Lots of PMI data has been released today.
    • Norway's May PMI fell to 54.3 from 54.6 in April.
    • Turkey's manufacturing PMI rose to 53.5 in May from 51.7 in April.
    • Hungary's May PMI rose to 62.1 from 56.2 in April. The country also achieved a trade surplus of 978 million euros in March.
    • Poland's manufacturing PMI falls to 52.7 in May from 54.1. A Reuters poll forecast it would rise to 54.5.
    • Spain's May manufacturing PMI rose to 55.4, its highest since January, from 54.5 in April. The employment PMI rose to 56.2 from 55.6 in April, its highest reading since 1998.
    Shares in Banco Popular are trading at the bottom of the STOXX 600 following a report that says a watchdog has warned EU officials that the bank may need to be wound down it if fails to find a buyer.  
    According to the Reuters report -- the head of the Single Resolution Board issued an "early warning" but later denied it issued any warnings.
    Shares in the bank are down more than 7 percent. These are the best and worst performing stocks on the index.
    These are the top headlines following the market open.
    • A recovery rally for oil, which gains on a drawdown in U.S. inventories after yesterday's sharp losses. But it's green energy in focus as President Donald Trump says he will announce his decision on the Paris accord today. 
    • Banco Popular shares sink to the bottom of the European market on reports it has been warned by a watchdog to wind-down if it fails to find a buyer soon. 
    • A leadership debate to end the month of May, but without the Prime Minister. Other party leaders go head-to-head as the latest polls show Labour closing the gap on the Conservatives ahead of the June 8th election.
    A new poll released by YouGov has found that the Labour party has slashed the Conservatives' lead even further. Jeremy Corbyn is now just 3 points behind Theresa May. During a BBC election debate last night, Corbyn argued against claims that raising corporation tax would result in businesses leaving the country.
    Vicky Pryce, board member at the Centre for Economics and Business Research, agrees that new technology makes it easier for businesses to leave the country.
    What we’ve seen in the U.K. in particular is this inability to extract enough tax out of those global firms which are able to sell a lot of things in the U.K. and then post all their profits somewhere else where they pay very little corporation tax. There is an issue that if you raise your corporation tax firms will move.

    However, Pryce says there is increasing demand for international action to ensure global firms pay taxes in the country where the money is raised. She adds that the tax burden is rising under the Conservative government.
    Italy's May manufacturing PMI falls to 55.1 from 56.2 in April. It was forecast to fall to 56.0.
    The PMI orders index also fell to 55.8 from 58.5 in April.
    China's foreign ministry has called for THAAD to be removed from South Korea, according to Reuters reports.
    The U.S. missile defence system was deployed in South Korea earlier this year.
    The foreign ministry also said China will stick to the Paris climate deal and says it has been in close touch with the U.S. on many matters including climate change.
    France has also now released PMI data.
    Manufacturing PMI fell to 53.8 in May from 55.1 in April. It was forecast to drop to 54.0
    Babak Hodjat, CEO of Sentient, says A.I. will impact across sectors and industries.
    The ones we’ve looked at so far range from trading to digital media optimization online. We have a product, for example, for ecommerce and shopping assistants online.
    We’ve looked into agriculture, health care. Just you name it, A.I. can be used effectively anywhere where there’s any kind of decision making that’s being validated somehow, and that kind of cuts across.
    He was unable to reveal whether A.I. traders were outperforming real-life traders and markets.
    Eurozone May manufacturing rose to 57.0 in May from 56.7 in April, matching forecasts.
    This is the highest since April 2011.
    Manufacturing output PMI rose to 58.3 in May from 57.9 in April, and the new orders index rose to 57.8 from 57.7, the highest since March 2011.
    Here are the top headlines for the hour.
    • A recovery rally for oil, which gains on a drawdown in U.S. inventories after yesterday's sharp losses. But it's green energy in focus as President Donald Trump says he will announce his decision on the Paris accord today.
    • Banco Popular shares sink to the bottom of the European market on reports it has been warned by a watchdog to wind-down, if it fails to find a buyer soon. 
    • A leadership debate to end the month of May, but without the Prime Minister. Other party leaders go head-to-head as the latest polls show Labour closing the gap on the Conservatives ahead of the June 8th election.
    The recent OPEC and non-OPEC production cut deal has helped oil prices stabilise around the $49 to $50 a barrel level.
    Despite this, Russia still forecasts oil prices at $40 and bases its budget on this assumption.
    Elvira Nabiullina, head of the Russian Central Bank, explains whether or not the bank is being overly pessimistic.
    I think we should be cautious. We should be conservative and we should consider some inflationary risks. Of course, this agreement with OPEC has supported oil prices, at least in short term. But it's very difficult to predict the dynamic of oil prices for longer term because we don't know exactly what could be the reaction of shale oil, we see that technologies are developing and I think that oil price dynamic medium-term could be in the range from $40 to $50 per barrel.
    And we will revise our forecast in mid-June and our forecast and our baseline scenario is $40 per barrel but maybe for this year we can revise it up.
    Nabiullina says the central bank is data dependent and every policy setting meeting analyses all these factors before deciding the next step.
    Netflix plans to spend $6 billion on original content in 2017, with that number expected to increase substantially in the coming years.
    Speaking to CNBC on the sidelines of the Code Conference, Netflix CEO Reed Hastings said membership growth will go hand in hand with increased spending on new shows and films. 
    He also commented on what he sees as the biggest competition, citing Amazon as one of the biggest threats to his business. 
    They are so scary. Everything Amazon does is just so amazing. How are they doing so many business areas so well?
    It’s like they are trying to repeal the basic laws of business of limited capability. We are continuing to watch them and be impressed with them, and they’re helping to grow the industry because they’re investing in the content.
    U.S. markets weakened yesterday, but still managed to finish the month higher. The Nasdaq has made gains for for seven consecutive months, the first time since 2013.
    Stock markets are called higher today, according to future values.
    Cyrus Mewawalla, founder & CEO at CM Research, answers whether or not the Nasdaq rally can continue.
    For the big tech stocks the rally has some way to go. I still think the FANG stocks in the west, and the BAT stocks - Baidu, Alibaba and Tencent in China – they’re still going to rise. 
    The reason I think is partly how you look at things. Sometimes you can look at these stocks and say they’re defying gravity, but it depends on your investment approach, so the way we look at it is we think it’s the big themes, the big tech themes that are driving share prices in the tech sector. 
    Mewawalla says their research says all the big themes in the next one to two years are benefiting the big stocks much more. Themes such as cloud computing require big investment by Amazon, Google and Microsoft, while augmented reality and autonomous vehicles require large data sets, which is why Microsoft bought LinkedIn, he argues.
    The U.K. has released PMI data.
    Manufacturing PMI in May fell to 56.7 (better than expectations of 56.5) versus April's 3-year high reading of 57.3.
    The PMI employment index came in at 54.1, its highest since June 2014, versus April 53.1.
    Stagnant revenues have spurred a number of mega takeover deals in the speciality chemicals sector. However, Russian agrichemicals giant Phosagro is managing to grow without turning to M&A, as the company is benefiting from a massive increase in domestic investment in agriculture. 
    Andrey Guryev, CEO of PhosAgro, says Russian agriculture has benefited from sanctions, as it has encouraged domestic investments.
    Last year, we’ve been able to increase up to 20 percent our sales of fertilizers to the Russian domestic market, which is great because it’s growing, it’s very strong, it’s getting to the export market so I believe it has a very strong future.
    George Soros is delivering a keynote speech at the Brussels Economic Forum, an annual event organized by the European Commission.
    He says the EU has lost its momentum and needs to be radically reinvented.
    The growing momentum may then be strong enough to overcome the biggest obstacle ahead, the danger of a banking and migration crisis in Italy.
    I can also see many spontaneous bottom-up initiatives and significantly they are mainly supported by young people. I have in mind the Pulse of Europe initiative which started in Frankfurt in November and spread to some 120 cities across the continent; the Best for Britain movement in the U.K. and the resistance to the Peace party in Poland and Fidesz in Hungary.
    The EU Commission has reached an agreement in principle with Italian autorities on the restructuring of Monte Dei Paschi Di Siena.
    Under EU State aid rules, the bank will need to be restructured to keep long-term viability, and Italy will need to be sufficiently remunerated for any capital injections.
    In a statement, EU competition Commissioner Margrethe Vestager, had this to say.
    This solution is a positive step forward for MPS and the Italian banking sector. It would allow Italy to inject capital into MPS as a precaution an, in line with EU rules, whilst limiting the burden on Italian taxpayers.
    MPS will undergo deep restructuring to ensure its viability, including by cleaning its balance sheet from non-performing loans. I hope this will enable MPS to focus on lending to the Italian businesses and support the Italian economy.
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